While the product or service sold, the training, the marketing and advertising are critical to a new franchisee’s accomplishments, the most important ingredient is still the ability of the franchise owner.
Most people considering buying their first franchise spend a lot of time fighting self-doubt and fear of failure. The stakes are high and everyone you care about will be watching. Many say they “know someone whose friend knows a guy” who had a bad experience in franchising. This causes a good deal of concern that they might make a bad choice and buy the wrong franchise.
A short investigation of franchising will produce the quote that over 60% of independent small businesses fail within the first 3 years while over 90% of franchised businesses are still open for business 5 years after opening! While these statistics came from a Department of Commerce study, it often seems that there are more “former franchise owners” in the marketplace than this study predicts. Yet, we almost never see a failure among the largest chains–who have thousands of opportunities to “get it wrong.”
While the product or service sold; the training; the marketing and advertising are critical to a new franchisee’s accomplishments, the most important ingredient is still the ability of the franchise owner. In fact, the smaller the operation, the more pivotal is the competency of the owner. It’s crucial then, that ensuring a good match between the franchise system and the entrepreneur is addressed by both parties.
Who’s screening whom?
My belief is that the best franchise systems do a better job of “screening out” buyers who they feel will not be successful. When you’ve opened a thousand or ten thousand units, you begin to recognize the winners from the losers. Managers in a mature system, would rather miss a sale than have a unit open offering inferior products or services because the franchise owner is unhappy in his/her choice and is now unwilling or unable to follow their system. Unfortunately, younger franchise systems may miss the signals that predict an “unhappy marriage” with a potential owner. Sometimes a macho (spelled naive) franchisor believes that the new buyer can be molded (“whipped in to line”) to become a successful franchisee. Worse yet, sometimes the franchisor has cash flow needs that encourage him to allow a marginal candidate to buy a unit.
This is not said to discount the incredible benefits provided by a proven system including superb start-up training and ongoing support from an outstanding home office team. But sometimes, all the help in the world can’t make the proverbial silk purse out of a sow’s ear.
Having served over 18 years in the franchise industry, I’ve met a number of people who have had bad experiences in their own franchise and I’m always searching for the cause of franchise failure, whether it results in a closing or the resale of a unit at a price that was unfavorable to the original owner.
How Does One Judge Franchisee Fitness?
A major breakthrough that can minimize failure in franchise systems lies in the topic of several recent best selling books including: “Emotional Intelligence, Why It Can Matter More Than IQ” in which author Daniel Goleman identified the three domains of excellence as Technical Skills, IQ and EQ. While searching for reasons why so few top academic achievers in high school and college were highly successful in their careers, he defined Emotional Intelligence (abbreviated EQ) as one’s command of self-awareness, motivation, self-regulation, empathy and social skills. Goleman points out that these elements greatly impact success in all areas of life–especially in one’s career. He even states that EQ is twice as important as IQ and Technical Skills combined when predicting achievement on the playing field of life.
The Key to Entrepreneurial Success
An exciting aspect of EQ is that it can change–unlike IQ, which is stable after age five. Discovering one’s behavioral traits and then sharpening them into skills that are a part of Emotional Intelligence, can help an individual gain control over his life.
It seems obvious that someone who has a well developed EQ would be well prepared to make the correct critical choice when evaluating franchise systems. Since he would truly know himself, by asking the right questions of the franchisor and existing franchisees, he’d find a franchise system where he would excel by maximizing his innate attributes. Whether it’s a job, or entrepreneurship, when you find the “Perfect Fit” for you, you cannot fail!
When you love what you do, when it “feels right,” every day is an exciting opportunity to excel. If you feel out of place, you question your capabilities, you wonder why “you don’t get it,” and then every day is a dreaded experience and you seldom achieve your true potential. It’s like going to work in a suit that’s four sizes too large, or worse yet, one that’s four sizes too small. You have behavioral traits that will make you a “natural” when you find the franchise system that rewards your unique personality mix.
Many buyers, when they’re beginning their search for a business of their own call and ask me “What’s hot?” I believe they’re better off discovering more about themselves so they can seek out a franchise career where they’ll be “The Perfect Fit”–where they’ll be a “natural.” When you have a clear understanding of your strengths and limitations, you’ll be better prepared to evaluate yourself in comparison to the superstars in any franchise system that you evaluate.
Are you positively sure you know “what makes you tick?”
Typically, most adults feel they have a good idea of “what makes them tick” but many times their spouses, friends and co-workers have a much different view. This is an area where the cliche “can’t see the forest for the trees” truly applies. Do people say that you have a great deal of untapped potential? Have you ever wondered why you haven’t achieved more in life? Is it really the boss’s fault? Are you still searching for the right opportunity? Are you sure you know the venue in which you can achieve your ultimate success? You’re convinced that when you find it you’ll know–it will be a “natural fit.” Still, you may not be looking in the right places.
Gaining the clearest focus possible on your “natural talents” is a critical step to finding the best franchise for you. Just as you wouldn’t take a job if you felt you weren’t qualified, you shouldn’t buy a franchise that requires a daily focus on skills that are uncomfortable to you. When you’re sure of the areas where you’ll excel, then you’ll be confident in selecting the franchise system where your talents will be rewarded. With over 3,000 companies offering franchises, the real goal is finding your best match and this is well worth the effort.
Who Should Be Responsible for Making the Right Choice–the Franchisor…or You?
In an ideal world, every franchisor would seek to insure that their new franchisees are well suited to their system. Until that becomes the norm, I’d suggest that the buyer (who has the most at risk) should inventory his or his behavioral competencies to help select a job description, then an industry and ultimately a franchise system where these traits will flourish. If one needs to convince a spouse, a partner or a banker of his fitness for a particular franchise, a candid assessment of his talents can be an invaluable tool.
After a careful study of a number of career placement surveys, earlier this year, The Franchise Doctor began offering a FranchiseFit Entrepreneurial Matrix at no cost to help readers obtain a clearer understanding of the strengths they possess and how these will impact their success in operating their own business. After answering a short survey on the internet, a report is generated and E-Mailed to them within 2 or 3 days. This is all available at The Franchise Doctor’s website along with a number of informative articles on franchising. By gaining new insights into their strengths and limitations, readers are better able to match their attributes to a franchise opportunity where they’ll shine.
The Franchise Doctor has also developed expanded job descriptions for the owners of typical franchises, by industry. You should never invest in a franchise where you are unsure of the daily activities of a franchise owner and how suited you are to perform these. This database of job descriptions, when matched with your talent survey will be an invaluable tool helping you find your Perfect Fit in franchising.
by Jim Deitz & Bruce King
Reprinted from BIZ Magazine September, 1999